The Census Bureau will release data on retail sales for April on Tuesday, with most economists predicting a weak report for the month. 

High prices and slowing wage growth will continue to dampen spending, which economists expect will either post a modest increase or a continued fall from March, which also reported a decline in sales. The data will show how much consumers spent on durable and nondurable goods as well as services in the last month. 


The data also comes as consumer sentiment, which measures attitudes around personal finance, prices and expectations around the economy’s health, fell to its lowest in six months. Recent bank failures spurred in part by consumer panic, tensions around the U.S. defaulting on its debt and cracks in the labor market all weigh on retail sales, an economic indicator heavily influenced by customer spending and confidence.


Here are five things to watch for in the report.

  • Spending will increase, but not by as much

Economists are predicting that retail sales will grow by 0.8 – 1% from March. Spending has significantly slowed since January, which saw outsize sales and spending across all categories. The streak did not last — February and March saw decreases in spending by 0.5% and 0.8%, respectively, dulling the impact of post-holiday spending. Fears of a looming recession and the increasing impact of still-high prices factored into the declines in the last two months, economists said. This represents a decline in real terms since sales are not adjusted for inflation.

  • Spending will continue to be dominated by spending in services over goods

Economists expect the sales trends that began during the pandemic to continue: customers bought furniture, electronic appliances and goods across the board as they stayed at home during the start of the pandemic, and when the economy re-opened, spending turned to services, like dining and drinking outdoors, pulling dollars away from goods. This trend bore out in the last two months — sales at nonstore retailers and food and drinking establishments rose 12.3% and 13% from a year prior, while sales at electronics and furniture stores fell by 10.3% and 2.4%. 

“The broad backdrop here is generally one of a consumer that had some really great years in the post reopening period—they bought a lot of the stuff that they need and they ran up a lot of bills doing it,” said Tim Quinlan, senior economist at Wells Fargo. “While retail sales mostly capture goods spending, it does have that bar and restaurants category, which could be a little bit more resilient than other areas.”

  • The Federal Reserve may determine additional interest rate hikes depending on retail sales numbers

The Federal Reserve issued its last interest rate hike May 3, increasing rates by a quarter of a percentage point to 5.25% in an effort to cool consumer spending and a hot labor market, both of which have proven resilient to high interest rates. The latest interest rate increase was the Fed’s 10th consecutive month raising rates in order to bring down prices — still higher than the Fed’s target 2% rate at 4.9%— as well as discourage consumers from spending. The Fed indicated at its last meeting that it may pause interest rate hikes for the moment—until April jobs numbers were published. 

  • The resilient labor market has kept spending up

The country added 253,000 jobs in April, beating economist expectations of 190,000 to 200,000 for the month. Unemployment fell to 3.4% from 3.5% in March, and Black unemployment rate broke a historical record for the second month in a row, falling from 5% to 4.7% in April. Wage growth, which has slowed year on year, nevertheless grew by 0.4% from the previous month. All this data points to a resilient economy — though even that is beginning to crack, as apparent in data showing slowing wage growth and announcements of layoffs.

  • Economists predict a downturn in spending in anticipation of a recession later this year

Retail spending has been all over the map in the last six months with a strong January report sandwiched by dismal spending in the November-December and February-March reports, which economists consider a sign that the red-hot economy of a year ago is finally slowing down.

“Although our forecast is for an increase, I don’t have a real high conviction around it,” Quinlan said. “My expectation is that retail sales kind of peters out over the next few months—we may get a decent month here or there, but on balance, most consumers are feeling the impact of higher prices, kind of forcing them to dial back their spending.”